New home construction holds steady following 10-year high

The Canada Mortgage and Housing Corporation (CMHC) released its housing starts report for January 2018, announcing steady new home construction continuing from last year.

The housing starts trend for January 2018 was 224,865 units, compared to the 10-year high in December 2017 (226,346). The trend is a six month moving average of seasonally adjusted annual rates (SAAR).

“The national trend in housing starts held steady for a third consecutive month in January, remaining near the 10-year high set in December,” says Bob Dugan, CMHC’s chief economist. “This reflects higher starts of multi-unit dwellings in urban centres in recent months, which has offset lower starts of single-detached homes.”

One area in particular that’s seen a surge in multi-unit starts is Guelph, leading to the highest January since 1991. Less detached homes and townhomes are under construction due to an increase in the cost of ownership, rising immigration of young professionals, and strong employment opportunities.

In Toronto, housing starts trended lower for the second consecutive month. While multi-unit starts increased, construction of detached homes decreased. The resale supply spiked, which equaled less demand for new detached homes. New condos are still in high demand as buyers seek the most affordable options and investors look to take advantage of rising rents.

In the Greater Toronto Area (GTA), there were more than 36,000 new condo sales in 2017, which means there’s a lot of construction in the pipeline. We expect multi-unit starts in Toronto to remain strong throughout the year.

Land restrictions and affordability concerns are causing an influx of townhome starts in Barrie as overall starts trended higher last month. This is the most townhome starts Barrie has seen since 1999. Population is growing thanks to a strong labour market, and it’s pointing to an increased demand for new homes.

Following high rental apartment starts in 2017, Kingston’s housing starts trend dropped for the fourth consecutive month. There is still a strong demand for resale and rental, and as inventory wanes, new construction should bounce back.

The standalone SAAR of housing starts for all of Canada was 216,210 units in January, practically unchanged from December’s 216,275.

The SAAR of urban starts was nearly unchanged, only increasing 0.2% to 198,400 units. Multiple urban starts held steady at 134,685 units and detached starts went up 0.6% to 63,715. Rural starts are estimated around 17,810 units.